Wednesday, December 31, 2014

Nancy Birdsall on Thomas Piketty and the Developing World:
"Recall that Piketty argues that the dynamic of ever-increasing inequality in capitalist systems is due neither to textbook imperfections and failures of markets nor to failures of economic and political institutions, but is inherent in capitalism’s process of growth itself. The way to control the resulting spiral of inequality is to implement a potent progressive tax policy.......In short, the rich democracies have built a capable and responsive state on the basis of a social contract forged over many decades of social confrontation and political compromise. That they are mature democracies matters. Economic growth has been accompanied by political growth over several hundred years, creating a virtuous political and economic cycle. In the fast-growing emerging markets— including Brazil, China, and India—economic growth over the last two decades has fortified the potential for that virtuous cycle to kick in. Still, in these and the poorer countries of the developing world, the challenge is not, at least not yet, the one Piketty outlines—that an inherent tendency of capitalism is to generate dangerous inequality that if left unchecked will undermine the democratic social state itself. The challenge is the other way around: to build a capable state in the first place, on the foundation of effective institutions that are democratically accountable to their citizens."This is not clear. The same tendency outlined in the beginning seems to work between countries too: $2 lost for every $1 gained and Poorer countries loose more from profit shifting and this from IMF.

An agnostic/atheist most of my life but coming from a Hindu background, I was curious to know a bit about Hinduism. Given my background in mathematics and science, Calasso seemed more understandable than the other books I browsed before. I am halfway through the book and will probably reserve the rest for future reading. It has been very readable so far but it seems to be a book that somebody like me has to take slowly. The chapter on Yajnavalkya, I enjoyed, and may be it is enough for now. There is a lot of fog upon fog but they seem to have thought of every thing possible from cosmos, the very process of thought and meaning and at the same time very aware of the human nature and built an edifice (or edifices) of thought and ritual which still resonates with many today. They started with some developed theories and rituals, probably somewhere in Persia. The changes in the meanings of 'asuras' and 'deavas' suggests (to me, but it is possible there were originally three categories) a dissident group migrated towards India and along the way had enough leisure to develop more and more elaborate theories. May be they were accompanied by by others who sustained them or found local patrons. In the process, the language developed adopted local words and gods, the older gods became more and more minor, the rituals more elaborate and more sacrifices an integral part of the rituals. Anyway this book seems to be a part of a series of books and was in the planning for a long time. In a 2005 article Roberto Calasso said:"In fact, one of the arguments of the books is that one cannot fully understand what happened since the beginning of the French Revolution and up to today if one doesn't take into account the very complicated and deep thoughts of the ancient risis on violence and the act of killing, which are both part of their theory of sacrifice. So the book is at the same time a narrative and a tentative reading of the metaphysical texture of modern history. "

May be. But during this process, they were sustained by others who did the hard physical work. And slowly it emerged that physical work was demeaning, I cannot but help feel that right from the beginning the seers took care of themselves with various duties about giving gifts to the priests. The vedic rites are still practiced in some parts, even in the south of India. It has sustained a system of inequality for a much longer period than anywhere else in the world and India still seems unable to get away from that spell. It is possible that there may be some lessons for the modern man in these texts and rituals but it seems to me that they have done enormous damage which is still difficult to undo.

Tuesday, December 23, 2014

Even though I read only a few books this year, it has been more satisfactory reading than before coming to terms with the sort of problems that have been bothering me. A few selections from this year: Piketty's 'Captal21', Emmanuel Todd's books particularly 'The explanation of ideology' and 'The causes of progress' and now 'Ardor' (which I am still reading) by Roberto Calasso. Some of the reviews of Calasso suggest that it is the final book in a whole body of work. But I think it can be read by itself and gives some glimpses of Hinduism to an agnostic like me. Ignore the horrible review by Pankaj Mishra (His review of 'The Namesake' I liked, but he seems to be writing a lot of rubbish) . Two books I read earlier and keep going back to are "The sources of Social power" by Michael Mann and "In an Antique Land" by Amitav Ghosh.P,S. Some are surprised that I included Amitav Ghosh. I am not the only one impressed by his early work. I think that when he was young, he let things come to him and changed somewhat when he started having opinions. I am not an enthusiast of his later work including 'The Glass Palace'. There is a much better review of Roberto Calasso's Ardor by David Shulman (pointed out by Sreenivas Paruchuri); unfortunately it is behind a firewall.

Sunday, December 21, 2014

From Couterpunch Ruble takedown exposes cracks in Putin defense (via Rao Nagisetty) "The prospect that there may be collaborators and fifth columnists at Russia’s Central Bank should surprise no one. The RCB is an independent organization that serves the interests of global capital and regional oligarchs the same as central banks everywhere. This is a group that believes that humanity’s greatest achievement is the free flow of privately-owned capital to markets around the world where it can extract maximum value off the sweat of working people. Why would Russia be any different in that regard?.....Like we said, Putin might be a great chess player, but in his battle with the US, he’s getting his clock cleaned. So far, he’s been no match for the maniacal focus and relentless savagery of the Washington powerbrokers. Yes, he’s formed critical alliances across Asia and the world. He’s also created competing institutions (like the BRICS bank) that could break the imperial grip on global finance. And, he’s also expounded a vision of a new world in which “one center of power” does not dictate the rules to everyone else. That’s all great, but he’s losing the war, and that’s what counts. Washington doesn’t care about peoples’ dreams or aspirations. What they care about is ruling the world with an iron fist, which is precisely what they intend to do for the next century or so unless someone stops them. Putin’s actions, however admirable, have not yet changed that basic dynamic. In fact, this latest debacle (authored by the RCB) is a severe setback for the country and could impact Russia’s ability to defend itself against US-NATO aggression."Yves Smith in Naked Capitalism quotes Dmitry Orlov "….at the moment Putin is pushing on a string. You see, once you staff the central bank with economic liberals trained to follow the dictates of the IMF, and do nothing to shut the revolving door between the central bank and other big banks (after all, if the Wall Street boys can do it, why can’t the Russians?) then why wouldn’t they rob their own people every chance they get, then attempt to use their ill-gotten gains to subvert the political system—just like the Americans have done?"Keynes in 1933 which I do not tire of repeating "Let goods be homespun whenever it is reasonably and conveniently possible. Above all, let finance be primarily national'. Raghuram Rajan, RBI governor on December 12, "Slow industrial country growth has made more difficult a traditional development path for emerging markets—export-led growth. Indeed, in the last decade, even as China developed on the back of its exports to industrial countries, other emerging markets flourished as they exported to China. Emerging markets now have to rely once again on domestic demand, always a difficult task because of the temptation to overstimulate. That task has become more difficult because of the abundance of liquidity sloshing around the world as a result of ultra-accommodative monetary policies in industrial countries. Any signs of growth can attract foreign capital, and if not properly managed, these flows can precipitate a credit and asset price boom and exchange rate overvaluation. When industrial country monetary policies are eventually tightened, some of the capital is likely to depart emerging market shores. Emerging markets have to take extreme care to ensure they are not vulnerable at that point.

What implications should an emerging economy like India, which has weathered the initial squalls of the “taper tantrums” of the summer of 2013, take away for its policies over the medium term? I would focus on four: 1) Make in India; 2) Make for India; 3) Ensure transparency and stability of the economy; and 4) Work towards a more open and fair global system."

Saturday, December 20, 2014

I thought that generally Putin was ok. But may be I was wrong. Here is a review of a recent book which is apparently heavily supported by documentary evidence. An excerpt:
"Indeed, in the months since Putin’s invasion of Crimea, it has become fashionable to suggest that the harder-line face that Putin has more recently shown to the world is somehow, once again, the West’s “fault,” that we have provoked Russia into autocratic behavior through our talk of democracy in Ukraine or that—once again—the “reform process” was somehow brought to a halt because the Russians felt threatened by the expansion ofNATOor by Western policy in the Balkans.

But after reading Dawisha’s book, and after absorbing the implications of the stories she has so carefully pulled together from so many sources, it is simply not possible to take this argument seriously. Since 2000, Russia has been ruled by a revanchist, revisionist elite with origins in the old KGB. This elite had been working its way back to power since the late 1980s, using theft on a grand scale, taking advantage of the secrecy provided by Western offshore havens, and cooperating with organized crime." (via Chris Blattman and from a comment, the book has a website http://miamioh.edu/cas/academics/centers/havighurst/cultural-academic-resources/putins-russia/index.html )

Tuesday, December 16, 2014

on "Convergence" "Lant Pritchett and Larry Summers are now trying to blow this up: to say that just as the neoclassical aggregate production function is a very bad guide to understanding the business cycle, as the generation-old failure of RBC models tells us, so the neoclassical aggregate production function and the Solow growth model built on top of it is a bad guide to issues of growth and development as well."Cosma Shailzi's comment : "Also, I will remind you that aggregate production functions make no sense in terms of neoclassical microeconomics "Prolegomenom to a reading course on Marx

These are the sort of questions I ask myself when I see many successful Indians abroad working as IP lawyers or for Halliburton...http://aaww.org/complicity-with-excess-vijay-iyer/ "That I humbly ask of you, and of myself, is that we constantly interrogate our own complicity with excess, that we always remain vigilant to notions of community that might, perhaps against our best intentions, sometimes, embrace a system of domination at the expense of others. Can we radically submit ourselves to the pursuit of equality and justice for all? If we choose to call ourselves Asian American, can we not also choose to be that kind of American that refuses to accept what America has been, and instead help build a better America even for others, who might not immediately seem to “belong” to us?"

In a July interview with RT "The basic principle to bear in mind is that finance today is war by non-military means."
This December Backfired! "The world’s geopolitics, major trade patterns and military alliances have changed radically in the past month. Russia has re-oriented its gas and oil trade, and also its trade in military technology, away from Europe toward Eurasia.

The result is the opposite of America’s hope for the past half-century of dividing and conquering Eurasia: setting Russia against China, isolating Iran, and preventing India, the Near East and other Asian countries from joining together to create an alternative to the U.S. dollar area. American sanctions and New Cold War policy has driven these Asian countries together in association with the Shanghai Cooperation Organization as an alternative to NATO, and in the BRICS moves to avoid dealing with the dollar area, the IMF and World Bank austerity programs."

Despite lot of pressure from USA about nuclear liability bill and for US reactors, according to today's report from The Hindu "The highlight of the meeting — part of an annual summit between the two countries — was the unveiling of a vision statement on atomic energy cooperation, where Russian nuclear agency ROSATOM and the Department of Atomic Energy and NPCIL have agreed to build at least 12 new reactors supplied by Russia over the next 20 years."

Wednesday, December 10, 2014

in The New Yorker. Lot of background material but I am not sure about the discussion on Ukraine. According to Emmanuel Todd "But basically, the new German system is based on the annexation of the active population.Initially they were used in Poland, the Czech Republic, Hungary, etc.The Germans reorganized their industrial system using their cheap labor.The working population of Ukraine of 45 million inhabitants, with its well-educated inherited from the Soviet era, would be exceptional grip for Germany, the possibility of a dominant Germany for a long time, and most importantly, with his empire, immediately passing actual economic power over the United States." Here is a little about what has been happening in Poland.

Monday, December 08, 2014

Since, I may have some more posts about Emmanuel Todd, I thought that I should start with some of the criticisms.Evelyn Rawski in her review of "The Causes of Progress" says "The attempt to encompass complex historical changes occur, ring over several centuries in all parts of the globe under one rubric suffers from inadequate data about various regional cultures and an overly simplistic analytic scheme." She gives specific examples from her own area of specialization: China. She also says "The great value of Todd's book lies elsewhere: it forces scholars out of the increasingly narrow specializations in which we tend to spend our lives. We may disagree with Todd's interpretation and his facts, but we can learn a great deal from the structural comparisons he makes. If comparative studies are stimulated by books like this, we may eventually achieve a more satisfactory synthesis to explain the demographic, economic, and cultural changes that are central to the early modem and modem historical ages."

William Roseberry in his review of "The Causes of Progress" (behind a firewall, is even more scathing. He says that the jump from family structures to attitudes leaves much to be desired. But he seems to go easy on Marx in Marx and Anthropoloy.

Lesly Page Moch in his review (again behind a firewall)of "The Explanation of Ideology" says "Problematic sources exacerbate the implausible aspects of the study..."

The above reviews are by academics. I do not know the background of the next reviewers.
Craig Willy in Emmanuel Todd’s L’invention de l’Europe: A critical summary "Todd’s method is to correlate everything. Though a historian, he is as interested in correlation across space as across time. Did I mention the book is also an atlas? The method in a word: Correlate, then speculate. The “speculate” part is definitely Todd’s weakness. " But he goes on to say "Todd is addicted to the “power” of the prophet. His various books have forecasted: the fall of the Soviet Union (1976), the failure of EMU (1995), the dysfunction of globalization (1997), the decline of the United States (2002), the democratization of the Muslim World (2007), and I probably missed one. Todd has no divine knowledge – he can hedge his bets or be inaccurate, he tends to over-generalize from the news of the day and dismiss things that do not neatly fit into his system – but he has a very solid data-based method, looking at the longue durée, which allows him to be far more interesting and worthy of attention than your standard pundit.". The missed one may be about Nicaragua. Check also this review of "After the Empire" and 'Testing Todd':"ThispaperhasinvestigatedwhetherthefamilysystemsthatToddattributesgreat explanatorypowertoforpoliticalandeducational developmentscanbecorroboratedwithother data.ThischeckcamefromethnographicdatacollectedinMurdock’sEthnographicatlas,translatedtocountry-leveldatawithethnicpopulationfiguresfromtheNarodovAtlas.Inhalfthecases,Todd’sfamilysystemscanbereconstructedtothe ethnographicdatafromMurdock.....TherearealsoimportantmismatchesinTheExplanationofIdeology."

Tuesday, December 02, 2014

In March 2012, Andrew Haldane and collaborators pitched for 'common financial language' and there is a response from SWIFT (written by M.Chisholm and A.Milne) in September 2013, where they explain the difficulties involved. In an April 2014 conference "Alistair Milne, professor of financial economics at Loughborough University, said that creating a single common financial language is not a realistic proposition as the industry does not perceive it to be a priority. “It is the deal that matters, as this is where the profits are made. […] The back-book becomes a secondary issue” said Professor Milne." A recent report from The Scotsman "Alistair Milne, professor of financial economics at Loughborough University, found even apparently simple terms such as “arrears” or “loan performance” can have different meanings within the same organisation."P.S. Andrew Haldane seems to be one of those rare species, a good banker. More about him by Justin Fox The regulator who explained the world which also has some links to the above topic.